Persimmon Live Discussion

frog_in_a_tree 25 Feb 2019

Not Looking Good For Housebuilders HTB has always been “help to profit” as it has helped to inflate selling prices. It has been a huge contrick. The money would have been better spent on building social housing to increase supply and deflate the housing bubble. Frog in a tree

marktime1231 25 Feb 2019

Not Looking Good For Housebuilders Confess I don’t fully understand the mechanics of the HTB scheme, but it is obvious the process has boosted builders without really doing much to solve the housing crisis. Of course the builders are not going to do anything to deflate the market such as a sudden step up in building. The govt getting angry because it has not followed through on its own promise to stamp on leasehold abuses … which I think come in 2 parts a) onerous contract terms like doubling ground rents every 10 years (scandalous and as you say mostly TW) b) why on earth are builders now selling what could be freehold houses on leasehold terms (because privately managed estates reduce the council burden and there is realisable added value for the developer). I cannot think of a fairer way of boosting new buyers on to the market, and more owner occupiers is so much better than more renting, but I cannot understand how HTB has been allowed to boost prices by 15% … surely that is the flaw.

J_Westlock 25 Feb 2019

Not Looking Good For Housebuilders Yes. The actual comment made recently by a “source” was: ‘Given the contracts for the 2021 extension to Help to Buy are being reviewed shortly it would be surprising if Persimmon’s approach wasn’t a point of discussion.’ and ‘James is clear any new government funding scheme will not support the unjustified use of leasehold for new homes, including Help to Buy.’ Now, make of that what you will but PSN aren’t the only housebuilder out there building rabbit hutches with lots of snags and using Help to Buy to feather their own Executives nest.

PrefInvestor1 25 Feb 2019

Not Looking Good For Housebuilders Well I did see this article which did seem to single out PSN The Telegraph Persimmon may lose Help to Buy contract after criticism Persimmon, Britain’s second-largest house-builder, faces losing its Help to Buy contract following claims of “poor standards and hidden charges”, according to The Times. And as for executive compensation. That story has been around for a long time. ATB Pref

J_Westlock 25 Feb 2019

Not Looking Good For Housebuilders I haven’t read anything that indicates PSN would be singled out @aspace. All I’ve read about is regarding the extension of the scheme (2021-2023) where the Government is likely to do something to stop the unjustified use of a leasehold for new houses (including the new Help to Buy scheme). On that basis… it should affect all house-builders relatively equally depending on what is done. PSN hasn’t exactly done itself any favours with it’s oversized Executive awards in recent months.

PrefInvestor1 25 Feb 2019

Not Looking Good For Housebuilders Hi @aspace, Well HTB is a really big thing for housebuilders, getting excluded would be a significant blow. Confess I wasnt aware that PSN did any leasehold, I thought that was only TW but clearly I’m wrong. Results from various housebuilders have been pretty good so far, and if new house are going to get built then they will have to be built by the current big housebuiilders - they arent going to get done any other way. And people ALWAYS need houses. But housebuilders are a political football an vulnerable to any threat in the form of HTB and brexit. They suffered a lot at the end of last year and there will be more ups and downs to come I reckon. I used to hold BDEV, TW & PSN and always thought PSN were the best of them. But I sold them all at the end of last year when the writing was on the wall. I have an ETF holding (ZILK) which provides some exposure though. This smooths out the ups and downs anyway. ATB Pref

aspace 25 Feb 2019

Not Looking Good For Housebuilders This news about banning Persimmon PLC from Help-to-buy because of “poor standards” and “hidden charges” looks like huge news hence the whack in the share price. But I don’t understand why it has come to light suddenly and it begs at least a few questions: Shouldn’t the government want Help-to-Buy to work successfully in which case they should table these kinds of issues with companies before making it public? (Maybe they did). Has the government now distorted the market by threatening to disqualify one of the market players? If so, who might be next? Were management not aware of these grumblings? Wasn’t at least one board member in touch with the Housing Secretary so that any issues like this could be tabled and resolved before having to hit the headlines? In other words, couldn’t this be handled a whole lot better than dumping it into the public domain?

J_Westlock 03 Feb 2019

Not Looking Good For Housebuilders frog_in_a_tree: The Sunday Times reports today: “BDEV is set to defy the gloom in the housing market by reporting a rise in the number of completed homes this week. It is expected to maintain its momentum when it unveils half year results (on Wednesday) after growing total completions by 1% to 17,579 for the year to the end of last June.” And hw does the Sunday Times journalist know that? Someone from Barratt’s supplied insider information?

PrefInvestor1 03 Feb 2019

Not Looking Good For Housebuilders Hi Frog, If better buy some more ZILK before Weds then !. ATB Pref

frog_in_a_tree 03 Feb 2019

Not Looking Good For Housebuilders LOOKING GOOD FOR HOUSEBUILDERS The Sunday Times reports today: “BDEV is set to defy the gloom in the housing market by reporting a rise in the number of completed homes this week. It is expected to maintain its momentum when it unveils half year results (on Wednesday) after growing total completions by 1% to 17,579 for the year to the end of last June.” Maybe we will see positive sp action this week with BDEV and other builders? Cheers, Frog in a tree

PrefInvestor1 21 Jan 2019

Not Looking Good For Housebuilders Hi @apace, Wasn’t aware of the origin of that quote, interesting !. In normal economic times I really like property based investments (housebuilders and REITs) but I am unsure how they will fare if brexit causes a big economic downturn. People always NEED houses but whether they can AFFORD what housebuilders want to charge for them (to maintain their profitability). And can they continue to get the skilled tradesman required to build them (in the absence of freedom of movement). For REITs I guess the equivalent issues are whether the demand for commercial property will be maintained enabling the REITs to raise their rents while keeping vacancy levels down. Especially in the challenged retail sector. Also if commercial property prices fall then this will impact directly on their NAV and share price is my guess. Both sectors have taken a hit but might recover with a softer brexit. I agree the PSN is probably pick of the bunch amongst house builders. Too soon to tell right now. Just hope you weren’t holding when they were £29+ !. Personally no plans to invest in these sectors ATM due to these risks. Might buy a UK ETF with significant housebuilder exposure though (ZILK) as a less wholehearted bet on the sector as a whole. ATB Pref

aspace 21 Jan 2019

Not Looking Good For Housebuilders Hi Prefinvestor1 But is “the writing on the wall” really? Given that the phrase “writing on the wall” originates with the fall of the Babylonian empire, I don’t think that equates to the fall of Persimmon! The indications are that whether we BREXIT with no deal, a bad deal, or remain inside, people still need houses. Persimmon’s strategy has been resilient as shown by consistently good results for several years now regardless of declining sentiment. I remain confident, as much as one can be in investing, that Persimmon will adapt to whatever happens.

PrefInvestor1 18 Jan 2019

Not Looking Good For Housebuilders Hi @apace, Well housebuilders have seen a major recovery in their share prices of late, most especially after the meaningful parliament vote - which pretty well ruled out a no deal brexit. Still at risk though IMHO until the final direction of brexit is clear. Same is true for REITS I think for much the same reasons. Both sectors were favourites of mine last year but I baled on both towards the end of the year when I could see the writing on the wall… ATB

aspace 18 Jan 2019

Not Looking Good For Housebuilders I don’t do stops either but that’s because I am always long. I just sit and wait it out. Glad to see a recovery in PSN over the past few weeks. Looks like we have a decent set of results coming out next month. And hopefully some news about the Capital Return Plan which is nearing its end.

IAmShareCrazy 25 Oct 2018

Not Looking Good For Housebuilders I swapped DFS for Eland Oil, although it seems both are going down. Stockopedia says Eland is Negative Altman Z score, FCF to debt is negative, high risk of earnings manipulation, broken long term trend line, below 200 day simple moving average!